Diet Clinic Tactics Draw Fire From Insurers

April 12, 1994|By THOMAS S. MULLIGAN Los Angeles Times

LOS ANGELES — A Place for Us, the insurers contend in their lawsuits, was at heart a chain of "fat farms" that masqueraded as psychiatric centers because most health plans do not cover weight-reduction therapy.

Michael quickly realized that A Place for Us wasn't the place for him.

Overweight and suffering from stress, the New Yorker had flown cross-country to attend what was advertised as a weight-loss clinic in sunny Southern California. The air fare was free and the treatment, he was told, was fully covered by his Blue Cross plan.

But when Michael reached Los Angeles, he was shocked to find himself booked into a psychiatric hospital in a run-down section of suburban Bellflower where he was diagnosed as suffering from psychotic depression and bulimia - conditions he denies ever having.

Then he was told he could not leave.

Michael's is one of many stories emerging from federal and state lawsuits in Los Angeles in which insurers accuse A Place for Us of enlisting doctors and hospital staff to falsify diagnoses and medical records in order to obtain payment for treatment that, whatever its value to patients, was not covered by their health plans.

A Place for Us, the insurers contend in their lawsuits, was at heart a chain of "fat farms" that masqueraded as psychiatric centers because most health plans do not cover weight-reduction therapy. They estimate that during its peak years from 1989 to 1991, the Orlando-based program generated $100 million in billings.

The program, which also is the focus of a federal grand jury investigation in Los Angeles, attracted several thousand patients through nationwide ads on television and in magazines such as People and TV Guide. The campaign was backed up by a telemarketing sales force and a toll-free telephone line.

Marketing blurbs played up the glamour of the clinic sites in Florida, California and Nevada.

"Visit the Queen Mary or take in a tour of one of Hollywood's famous movie studios," one brochure invited prospective patients.

For most patients, A Place for Us was a free ride, insurers contend. Air tickets, a limousine from the airport to the clinic, four weeks of treatment, outings to Disneyland, Universal Studios and the beach - all were included in a therapy regimen whose average cost to insurance companies was $30,000 to $40,000.

The grand jury probe has resulted in a guilty plea to felony fraud charges by a psychiatrist who admitted falsifying patient records to trigger insurance payments.

The psychiatrist, Dr. Barry Alan Smolev, is said to be cooperating with investigators while awaiting senten-cing. He declined to be interviewed.

The program's owner, Janet Greeson, author of popular self-help books, is the main focus of the federal criminal investigation and insurers' lawsuits. She said she is the innocent target of a Blue Cross vendetta that has crippled her business, saddling her with personal losses of more than $1 million in the past year.

Greeson brandished a list of nearly 100 former patients of A Place for Us who she said would testify in her behalf. Several patients telephoned at random from the list warmly praised Greeson and the program.

Geeson has countersued the Blue Cross affiliates, charging that they have tried to ruin her by rejecting her clients' legitimate claims.